Pending home sales in the United States fell in July. This dramatic recession is a testament to the challenging climate for inconvenient logistics buyers and sellers alike. The National Association of Realtors gave a disappointing signal with its monthly pending home sales index, which fell 0.4% from June. It still represented a 0.7% year-on-year increase compared to the same period in 2022. With mortgage rates swinging all over, the rate of contract cancellations jumped to the worst level on record back to at least 2017.
In July, the effective rate on the most popular mortgage—the 30-year fixed—began the month at 6.67%. It increased to 6.85% by mid-month and closed out the month at 6.75%. This small upward trend in mortgage rates added to the overall discouragement of would-be homebuyers.
Pending home sales also experienced a record number of cancellations, sorely felt in hot markets such as Texas and Florida. San Antonio, in particular, stood out with the highest cancellation rate by far at 22.7%. Fort Lauderdale was a close second with a 21.3% rate, and Tampa came in with a 19.5% cancellation rate. Together, these figures paint a picture of increasing hesitation among purchasers, both of whom are continuing to face affordability pressures in an uncertain market.
Previously in July, pending home sales fell month-to-month across the Northeast region. That same trend was true in the Midwest. At the same time, the South held steady, with no change noted, and sales in the West saw a slight uptick.
According to Lawrence Yun, Chief Economist for the National Association of Realtors, even with modest improvements in mortgage rates, housing affordability, and inventory buyers remain skittish. This reluctance still exists among would-be homebuyers.
Jake Krimmel, a housing market analyst, commented on the broader implications of these trends: “It’s been a ‘Cruel Summer’ overall: buyers remain squeezed by affordability challenges while sellers have been slow to adjust expectations, leaving the housing market stuck in neutral.”
As would-be buyers deal with these factors, the housing market still has a lack of clear direction. Another factor making buyers hesitant are the rising mortgage rates. Buyers and sellers alike will have to adjust to make winning deals happen in the months ahead.